India To Buy More IMF Gold?

The low for gold in Tuesday trading occurred shortly after Hong Kong opened for trading yesterday morning... but by 1:30 p.m. in their afternoon the gold price was back in the $1,165-$1,170 price range... and for the most part, it stayed there for the rest of the trading day right until the New York close yesterday afternoon. The New York low occurred at the London p.m. gold fix.

Silver's ride, as per usual, was more 'volatile'... and more or less followed gold's price the entire day... with the Far East low in early Hong Kong trading... but, unlike gold, it's absolute low of the day was at the London p.m. gold fix, where its price got down to $18.31 spot. It should also be obvious to everyone that JPMorgan is not allowing gold's up-side break-out to be confirmed by silver.

The shares followed the precious metals prices down right into the London p.m. gold fix, which was shortly after 10:00 a.m. in New York... but never got back into the plus column... even though gold finished up on the day. The general equity markets were also in the red most of the day, which didn't help either. And you will also note that the Dow bottomed at the London p.m. gold fix as well.

Open interest for Monday's option expiry are as follows: Gold o.i. rose a rather large 14,127 contracts on the big volume of 322,926 contracts that I mentioned in my commentary yesterday. So any idea that Monday's price rise had anything to do with short covering got dashed on the rocks with that number. It's the same old, same old pattern... as the tech funds and speculators pile in on the long side and the bullion banks go short against them. Total gold open interest is now getting up there at 549,507 contracts.

Silver open interest rose only 831 contracts to 144,505 contracts. As I mentioned in my commentary yesterday, volume was a monstrous 79,892 contracts.

Most of the volume in the last few days have been spread and switch related...as everyone switches their futures contracts around in front of first day notice on Monday. Last day of trading for the December contract is on Friday...so it could be a wild ride for the next couple of days as far as open interest and volume data is concerned.

The CME had no delivery data worth noting yesterday... but over at the GLD and SLV ETFs, there was a lot of activity. GLD reported a small increase of 29,410 ounces... but, once again, the real news was over in the SLV ETF where they took in another monstrous pile of silver... this time it was 4,371,724 ounces. One wonders how much more silver is still owed SLV... as 20.5 million ounces have been added since October 13th. It's at least reassuring to see that the managers of the SLV are finally covering their short positions, as it's now obvious to all except the extremely pig-headed that this, in fact, was exactly what was happening... they were shorting the shares many months ago because they couldn't get the physical silver.

The U.S. Mint also had an update yesterday. They reported another 15,500 gold eagles, 276,500 silver eagles and 6,000 24K gold buffaloes sold. To date this month, they've sold 122,000 gold eagles and 2,586,500 silver eagles... along with 40,500 24K gold buffaloes. Over at the Comex-approved warehouses... a very small 12,152 ounces of silver were reported withdrawn.

In a Reuters story posted over at Kitco come this headline... "ECB-Gold reserves down by 3.0 million Euros in week"... "Gold and gold receivables held by euro zone central banks fell by 3 million Euros to 238.147 billion Euros in the week ending Nov. 20, the European Central Bank said on Tuesday... Gold holdings reflected the sale of gold by one euro zone central bank, consistent with the Central Bank Gold Agreement, a purchase by another central bank, and a technical adjustment by one central bank, the ECB said." I'm not providing the link, because that's all there was in the story worth noting.

In a Reuters story filed from Hanoi earlier this morning, comes this headline... "Vietnam grants quotas for 10 tonnes gold imports-TV"... Vietnam's central bank has granted quotas for the import of 10 tonnes of gold since lifting an import ban earlier this month and 6.8 tonnes had already come in, state broadcaster VTV said on Wednesday.

"The imports will have an impact on the local gold market," VTV quoted State Bank of Vietnam Governor Nguyen Van Giau as saying. He said the quotas had been granted to eight banks and three gold traders, it reported, without specifying names.

Since I won't be filing my column for either Thursday, Friday or Saturday... I'm going to load up this column with everything that's still sitting in my in-box. Hopefully, you'll have time to pick through it all.

There were a couple of gold-related stories yesterday that drew some big headlines. The first was the story out of The Wall Street Journal with the sensational headline that read... "A Mad Rush As Gold Bugs Get The Boot". "HSBC USA has told retail clients to remove their small holdings from its fortress beneath its tower on New York City's Fifth Avenue. The bank has decided retail customers aren't profitable enough and is demanding those clients remove their gold to make room for more lucrative institutional customers." HSBC is custodian for the GLD ETF... and this is one of the "institutional customers" to which the story is referring. This is really old news, as HSBC USA gave all their retail customers notice of this about six months ago... and I carried that story in this column at that time... so this is really no surprise. The WSJ story is carried in its entirety at morningstar.co.uk... and I thank reader P.S. for sending it along... and the link is here.

The other gold story with sensational headlines showed up yesterday evening. Back in June, it was discovered that the Royal Canadian Mint was shy a bunch of gold and other precious metals... 17,514 troy ounces... and no one knew where it had gone. Well, the problem may be solved... sort of. I have two linked stories, the first is from The Ottawa Citizen headlined "No Theft at Mint: RCMP"... and the link is here. The other is a CTV News story headlined "Big error behind missing gold at Royal Canadian Mint"... and the link to that story is here.

Those weren't the only gold headlines yesterday... here are three more. The first story was posted in the Brisbane Times in Australia's afternoon earlier today. The headline reads "Miners: We're running out of gold"... "Almost everywhere, mineral deposits are being exhausted and new deposits are not being found fast enough to replace them, these experts explain." It's a story we've heard quite a bit lately, but it's still very much worth reading... and the link is here.

The next gold offering is contained in a Dow Jones News Wire story filed out of Singapore yesterday. The headline reads "Emerging Market Central Banks Have Scope to Buy More Gold". It's a short piece... and the link is here.

Twenty-four hours after that story was filed, came this piece I picked up over at Kitco late last night. It's a story out of the Financial Chronicle in India. The headline reads "India Plans to Buy More Gold From IMF"... "The Reserve Bank of India (RBI) may well buy IMF’s remaining hoard of 201.3 tonnes on acceptable terms, which are now under negotiation." Let's see how this turns out in the days ahead. The link to the story is here.

Here's a story out of yesterday's edition of The Telegraph in London. The headline pretty much says it all... "Bank of England tells of secret £62 billion loan to save RBS and HBOS"... "In a shock announcement, the Bank disclosed that it had been forced to use its lender of last resort facility last October to "buy time" for RBS and HBOS, which were "effectively... bust". It managed to keep the loans - the equivalent of almost £3,000 for every household in the UK - a complete secret to all but a handful in the City for well over a year." HBOS is the acronym for the Halifax Bank of Scotland... and the link to the story is here.

Here's another Reuters piece that was filed from Paris yesterday. This is another article that shows you in living, breathing colour just how insolvent the western banking system really is... and all the money made up out of thin air to save it, isn't going to help one iota. The headline reads "Half of banks' losses may be unknown: IMF chief". It's not a very long read... and the link is here.

The next piece arrived in my in-box late last night as well. It's a Bloomberg story headlined "FDIC's Bair Wants Secured Creditor to Pay in Bank Failures". The story is courtesy of Craig McCarty... and he has a few things to say about it... When have private, secured lenders ever been asked or required to bail out their borrowers [Too Big To Fail Banks]??? The FDIC is underwater by billions of dollars. It cannot access its $500 billion line of credit with the Treasury Department, because the Administration is bumping up against the Federal Deficit Limit. Obama and Congress are playing "chicken" with the budget deficit as they try to pass their health care "reform" bill. They do not want to tell the US taxpayers the truth about their already out-of-control spending. We live in very historical times. [Yes, we certainly do. - Ed] The link is here.

And lastly, here's a Reuters story [courtesy of Mike in Ottawa] from last Friday that kind of slipped under the radar. It involves the US$ Index [DXY] and the InterContinental Exchange... better knows by its acronym... ICE. It appears that the ICE cancelled a substantial [9%] spike [75.38 to 82.18] in trades early Friday morning [around 7 a.m. Eastern time]. If they had gone through... the markets would have plunged, short positions on the US$ would have to be covered and massive selling in long positions in commodities would have occurred. "This has occurred twice within a two-week time frame leading market participants to believe that there is some suspicious [cancellation] of legitimate trades by the ICE. The move briefly had an impact on other markets, as futures on the Dow Jones Industrial Average fell as much as 99 points." The story is linked here.

A successful man is one who can lay a firm foundation with the bricks others have thrown at him. - David Brinkley

Since there's no Saturday report, I thought I'd slip in this 'blast from the past' a little early. This female singer/songwriter is known world-wide... and this selection comes from her 1971 Grammy Award-winning album, Tapestry. Turn up your speakers, click here... and feel free to sing along.

I just checked the CME website and they've updated the volume numbers for Tuesday's trading in both gold and silver. I thought Monday's volume numbers were huge... but gold and silver volumes yesterday were both record-breakers by a substantial margin. In gold, volume was 398,318 contracts. A large percentage of that was switches and spreads... and a believable open interest number won't be available until around lunchtime today. Silver's volume yesterday was a knee-wobbling 92,498 contracts... a new record by a huge margin.

Far East trading activity in both metals earlier today was pretty active. Silver was up about 20 cents until London opened... and gold is still hanging onto an $9 gain. Volume in the December futures markets is pretty heavy... 7,381 contracts in silver and 42,840 in gold as of 5:45 a.m. Eastern time. As I said earlier, activity for the balance of this week will be extra heavy with first day notice for delivery into the December contract coming up on Monday... and last trading day for the December futures contract on Friday.

With, or without, a correction in both gold and silver... both metals remain in a bull market that has no end in sight at the moment. The US$ is toast and central banks world-wide are exploding their money supplies. Gold is already up 30% this year so far... which makes nine out of ten years in the plus column. The really easy money in gold stocks has already been made... but the big, big money is still to come. If you are thinking about investing in the precious metals market, I urge you to seriously consider a subscription to Casey's Gold & Resource Report. It's only US$39/year with a 100% guarantee of satisfaction, or you can cancel within 90 days, and we'll immediately refund every penny you paid... no questions, no risk... you like it, or your money back. How can you lose?

As I mentioned earlier, this will be the last report from me this week. Normally I would not have a report until next Tuesday, but I've informed the good folks at Casey Research HQ that I will have one first thing Monday morning. Because with 5 days worth of news and action in the gold market, I don't want to have to put it all in Tuesday's commentary... as Monday is first day notice for December delivery, plus the COT report... and I'll have enough to talk about with just that. So look for my column in your in-box on that date.

I wish all my American readers a safe and happy Thanksgiving holiday. Eat lots... drink lots... and bring 'em back alive!

See you Monday morning.